“War is Good for Business”: Big Oil, Wall Street and the Pentagon’s “New Cold War” Against Russia

By Bill Dores
Global Research, May 08, 2014
Url of this article:
http://www.globalresearch.ca/war-is-good-for-business-big-oil-wall-street-and-the-pentagons-new-cold-war-against-russia/5381198

The Soviet Union no longer exists. The Russian Federation is not a
socialist state. But the U.S. military and political establishment
still seeks to destroy Russia. That’s the object of the crisis the
Pentagon, State Department and CIA are orchestrating in Ukraine.

What drives this seemingly irrational course of action?

The same thing that drove the George W. Bush regime to invade Iraq in
2003. The same thing that’s driving the violent anti-China rhetoric
from the Pentagon and the White House: financial need and cold economic
calculation.

Not the financial need of the hungry and homeless, of the millions who
need jobs at living wages, of those who can't pay their rent or
mortgages or who must choose between heating and eating.

It’s the need of Wall Street bankers and 'corporate CEOs to pump up
their profits, stock prices and rates of return on their invested
capital amid a global economic slowdown caused by capitalist
overproduction.

The U.S. Energy Information Administration projects that the United
States will replace Russia this year as the world’s top hydrocarbon
energy producer. It says the U.S. will replace Saudi Arabia as the
world’s No. 1 oil producer by 2015.

This is the result of the U.S. capitalist class investing hundreds of
billions of dollars over the past 10 years in tracking – the hydraulic
fracturing of oil and natural gas from shale rock. ExxonMobil, the
world’s most profitable company, spent $41 billion I in 2010 to buy
tracking giant XTO Energy. ExxonMobil is now the largest U.S. natural
gas producer.

Chevron, Phillips 66, Valero. Berkshire Hathaway and General Electric
are other top 10 Fortune 500 companies betting billions on the
super-profits they hope tracking will bring. Some of them have ascended
to the top 10 based on these investments. Halliburton, the Koch
brothers and hedge funds like KKR are heavily invested. So is every
major bank.

But these environment-destroying investments would not be profitable
without the triple-digit oil prices of the past decade. These record
prices were made possible by the violent suppression of Middle East and
North African energy production by the Pentagon through war and
sanctions.

Iraq War a bonanza for Big Oil

The U.S. invasion of Iraq devastated that country. And it hit hard at
working class and oppressed communities in the United States. For Big
Oil and Wall Street it was a bonanza.

In 2002, before U.S. invaders destroyed Iraq's state-owned oil
industry, the price of West Texas Intermediate crude, a benchmark used
by the oil industry, hovered around $20 a barrel. By April 2003, when
U.S. tanks rolled into Baghdad, WTI crude was over $40 a barrel,
ExxonMobil and Chevron, the biggest U.S. oil companies, saw their
profits rise nearly 300 percent.

By mid-2008, war threats and sanctions against Iran combined with the
continued wars in Iraq and Afghanistan to drive oil up to $147 a
barrel. It was ExxonMobil’s most profitable year ever.

War in the Middle East made profitable the plunder of Canada's tar
sands, the proposed Keystone XL pipeline and new mountaintop removal
projects in I Appalachia. It enabled the building of the
Anglo-U.S.-owned Baku-Tbilisi- Ceyhan pipeline from former Soviet
Central Asia to the Mediterranean and new U.S. energy investments in
Africa.

But capitalists will do what capitalists do. When profits and prices
are booming, they will produce “more | than the market can bear.” The
third quarter of 2008 saw a global capitalist economic crisis and oil
prices began to fall. Sanctions against Iran and Sudan, the 2011
U.S./NATO bombing of Libya and the CIA-orchestrated war in Syria, which
blocks a potential Iranian oil j pipeline to the Mediterranean, have
slowed the decline but not reversed it.

Some analysts predict prices as low as $50 a barrel by 2015. Oil and
natural gas prices tend to move in tandem, and oil prices of $60 to $80
a barrel are needed for most tracking projects to break even. Shale
reserves with a value of $26 trillion at today’s prices could become
worthless.

A crisis that disrupts the flow of Russian energy to Europe would
change the picture radically. On April 14, CNBC announced “oil hovers
near' $108 as Ukrainian crisis worsens.”

‘Cold War’ chained Western Europe to U.S.

In the 1970s the Soviet Union was the world's top energy producer. Much
of its production was consumed domestically or provided to other
socialist countries in barter arrangements. Western Europe relied on
Arab and Iranian oil and gas sold by U.S. and British monopolies.

In the early 1980s, German and French banks financed a massive Soviet
pipeline project, called Urengoi 6, to bring Siberian natural gas to
Western Europe. The Reagan regime launched an overt and covert campaign
to sabotage the project. (“A Tale of Two Pipelines,” Workers World.
June 10, 2005) Washington wanted to hurt the Soviet economy, of course.
It also wanted to keep Western Europe; dependent on U.S. energy
monopolies The project was completed, however, and Soviet natural gas
poured into Europe.

In 1998, Russia, now capitalist responded to a speculative attack or
its currency by devaluing the ruble. Oil fell below $11 a barrel,
throwing the Western oil industry into a panic

The U.S. responded with missiles and bombs. The target was not Russia
but Iraq. Within three months the Clinton regime came up with an excuse
for a massive bombing campaign against Iraq, which was already
suffering from U.S.-orchestrated sanctions. Two years earlier, U.S.
Secretary of State Madeleine Albright had admitted that sanctions had
killed 567,000 Iraqi children. She said the “price was worth it.”

As bombs rained on Iraq, Energy Secretary William Richardson was
begging U.S. oil executives to build oil and gas pipelines to former
Soviet Central Asia to cement U.S. influence there. They told him it
would not be worth it unless he could guarantee oil prices above $40 a
barrel for a sustained period. It took the 2003 invasion of Iraq to do
that.

War to restrict production

Energy is the world’s most profitable commodity. But other interests
are at stake. The Pentagon needs to protect and expand its bloated
budget, which faces “mandatory” cuts in 2016. The generals want to
expand NATO to the east and put U.S. troops in the former Soviet Union.
The military-industrial complex wants more arms sales to Eastern
Europe, with Ukraine as a customer.

Then there is the heart of the system — Wall Street itself. Bankers and
politicians know that war and crisis abroad drive capital into the
United States, cutting the deficit, propping up the dollar and helping
keep U.S. banks at the center of the world economy. Л/all Street
analysts hope and predict that capital flight from Russia alone could
reach $150 billion this year, more than twice what it was in 2013.

The monopoly-dominated world capitalist market is saturated with
commodities and capital. It is in a permanent battle because of a
crisis that is unique to the capitalist system: overproduction. Bankers
sit on trillions of dollars they cannot reinvest at an “acceptable”
rate of profit.

The world imperialist system cannot absorb the productive capacity of
the vast industrial-technological-scientific apparatus that exists in
the former Soviet Union – just as it cannot absorb the labor power, the
minds and capabilities of hundreds of millions of people around the
world.

The imperialist market has no room for the Eurasian Union, the
Commonwealth of Independent States, the Shanghai Economic Cooperation
Organization or the rising bloc of BRICS nations (Brazil, Russia,
India, China and South Africa), which Iran seeks to join. It has no
room for the African Union or the Bolivarian Alliance of the Peoples of
Our America.

The dominant mode of production in the above-mentioned blocs Is
capitalist. But an important factor in their economic growth is the
state-powered economy of the People's Republic of China, a product of
the great socialist revolution of 1949. Moreover, the state-owned
sector of Russia's economy has risen to 60 percent under the Putin
administration

The “Cold War” did not end with the fall of the Soviet Union, because
it was driven not only by hostility to socialism but by the internal
contradictions of capitalism itself.

In the “Cleveland massacre" of 1872, John D. Rockefeller drove hundreds
of independent drillers out of business to create the Standard Oil
trust. Apologists for capitalism have justified such practices as
“creative destruction.” In its time of decay, the U.S. monopoly
capitalist class and its state apparatus must destroy in order to
survive.